Blockchain-based applications will revolutionize the way people and organizations interact with each other and the Internet of Things (IoT) — and rightfully so. Based on the foundational principles of trust, blockchain has the potential to solve real-life business challenges within every sector. Permissioned blockchain can provide a platform for a trusted network of parties to transact in a distributed, secure and transparent manner while maintaining the privacy and confidentiality of information.

Blockchain architectures provide a paradigm shift. While information was once held by a single owner, it can now live in a shared ledger that is updated every time a transaction occurs through peer-to-peer replication. Cryptography ensures network participants see only the parts of the ledger that are relevant to them and to authenticate transactions. Once network participants agree how transactions should be verified, no participant can tamper with or modify the transaction. In the case of an error, participants must initiate a new transaction to reverse it. Participants know where the asset came from and are aware of changes to the ownership over time.

An Ecosystem of Easy Targets

Blockchain technology is based on robust cybersecurity principles. But just like businesses, they cannot operate in isolation. The business value is driven by an ecosystem of participants, applications and the business networks they operate in. And where there is an ecosystem, there is potentially an exposed attack surface.

Participants can include business users interacting with blockchain applications on their devices; developers coding and deploying programmable business logic or smart contracts; regulators with overall authority in a business network; network or infrastructure operators responsible for operational management and network and platform monitoring; and certificate authorities in charge of managing certificates.

Participants bring a human element to the blockchain and can be easy targets for cybercriminals. The threats we often read about in the news include stolen credentials, privileged access misuse, account takeovers, social engineering, phishing scams, software backdoors, human error, collusion, malware injections and compromised devices.

Blockchain applications can run on platforms and infrastructures in private, public or hybrid environments. The security pyramid — physical, network, user, application and data — becomes highly relevant within the context of the operating model. In addition to the threats cited above, distributed denial-of-service (DDoS) attacks, data disclosure, tampering, platform misconfigurations and unpatched vulnerabilities are prevalent threats.

At its core, blockchain uses digital cryptography and hashing to maintain confidentiality and integrity of information. Although cryptography has evolved over the years and can be difficult to decipher, keys can still be compromised or corrupted, encryption codes can be broken, and the advent of quantum computing will only make it easier. Blockchain relies on public key infrastructure (PKI), which has had its share of security incidents, notably against root certificate authorities such as Thales and RSA.

Essential Building Blocks of Blockchain Security

Good cybersecurity starts with assessing the threat landscape, identifying the risks and implementing effective controls to mitigate it. Blockchain-based applications are no different. Security hygiene still applies.

To say the least, organizations need to focus on the essential building blocks of security to protect a blockchain-based ecosystem. These steps are as follows:

Most organizations have already boarded the blockchain bandwagon with investments in proofs of concept (PoCs) and feasibility studies. It is just a matter of time until blockchain-based applications gain mainstream adoption and touch every aspect of our lives. Whatever the case, no level of automation or investment in technology can guarantee security. Proactive, risk-based cybersecurity should not be an afterthought but a prerequisite. After all, it takes just one weak link to break the blockchain.

Stay tuned for the next two parts of this three-part series to learn more about the critical threat vectors, essential building blocks and underlying security model for protecting blockchain.